And the parallel between these themes and the metaphysics of Karl Popper

The Even More Austrian Program

The two key pieces for this project are both on line, the first a paper contributed to the collection on the legacy of Menger edited by Bruce Caldwell (supplement to "History of Political Economy" in 1990) and the second a book on Austrian philosophy where that paper appears in a modified version as the last chapter.

http://ontology.buffalo.edu/smith/articles/menger.html

The book is on line in full unlike those tantalizing google books that give you half of the text or less!

http://ontology.buffalo.edu/smith/articles/austphil.html

Picking up the article , one of the features to emerge is the similarity between Popper's position and the "Austrian Aristotelianism" as described by Smith in seven general points and some extra points applied especially to the social sciences.

The following text is taken straight from his paper.

1. The world exists, independently of our thinking and reasoning activities. This world embraces both material and mental aspects (and perhaps other sui generis dimensions, for example of law and culture). And while we might shape the world and contribute to it through our thoughts and actions, detached and objective theorizing about the world in all its aspects is nonetheless possible.

2. There are in the world certain simple `essences' or `natures' or `elements', as well as laws, structures or connections governing these, all of which are strictly universal, both in that they do not change historically and in the sense that they are capable of being instantiated, in principle (which is to say: if the appropriate conditions are satisfied), at all times and in all cultures.

3. Our experience of this world involves in every case both an individual and a general aspect. As in Aristotle himself, so also in Menger and in the work of other Aristotelians such as Brentano and Reinach, a radical empiricism hereby goes hand in hand with essentialism. The general aspect of experience is conceived by the Aristotelian as something entirely ordinary and matter-of-fact. Thus it is not the work of any separate or special faculty of `intuition' but is rather involved of necessity in every act of perceiving and thinking a fact which makes itself felt in the ubiquitous employment of general terms in all natural languages. Thus the general aspect of experience is as direct and straightforward as is our capacity to distinguish reds from greens, circles from squares, or warnings from congratulatings.

For Menger, as for Aristotle, what is general does not exist in isolation from what is individual. Menger is, like other Aristotelians, an immanent realist.(9) He is interested in the essences and laws manifested in this world, not in any separate realm of incorporeal Ideal Forms such as is embraced by philosophers of a Platonistic sort. As Brentano formulates the matter in his study of Aristotle's psychology:

the scientist wants to get to know the crystals and plants and other bodies that he finds here on earth; if therefore he were to grasp the concepts of tetrahedra and octahedra, of trees and grasses, which belong to another world, then he would clearly in no way achieve his goal. (1867, p. 135, Eng. p. 88)

Things are no different even in the case of mathematical knowledge:

The individual straight line which is in the senses, and the being of this line which the intellect grasps, are essentially identical. One is therefore not allowed to suppose that the intellect should grasp something more immaterial than sense, that it should take into itself something incorporeal or at least something non-sensory. No: the very same thing which is in the intellect is also in the senses, but related to other things in different ways. (op. cit.)

As Menger puts it:

the goal of research in the field of theoretical economics can only be the determination of the general essence and the general connection of economic phenomena. (Menger 1883, p. 7, n. 4, Eng. p. 37)

The theoretical scientist, then, has to learn to recognize the general recurring structures in the flux of reality. And theoretical understanding of a concrete phenomenon cannot be achieved via any mere inductive enumeration of cases. It is attained, rather, only by apprehending the phenomenon in question as a special case of a certain regularity (conformity to law) in the succession, or in the coexistence of phenomena. In other words, we become aware of the basis of the existence and the peculiarity of the essence of a concrete phenomenon by learning to recognize in it merely the exemplification of a conformity-to-law of phenomena in general. (Menger 1883, p. 17, Eng. pp. 44f.)

4. The general aspect of experience need be in no sense infallible (it reflects no special source of special knowledge), and may indeed be subject to just the same sorts of errors as is our knowledge of what is individual. Indeed, great difficulties may be set in the way of our attaining knowledge of essential structures of certain sorts, and of our transforming such knowledge into the organized form of a strict theory. Above all we may (as Hume showed) mistakenly suppose that we have grasped a law or structure for psychological reasons of habit. Our knowledge of structures or laws can nevertheless be exact. For the quality of exactness or strict universality is skew to that of infallibility. Episteme may be ruled out in certain circumstances, but true doxa (which is to say, `orthodoxy') may be nonetheless available.

5. We can know, albeit under the conditions set out in 4., what the world is like, at least in its broad outlines, both via common sense and via scientific method. Thus Aristotelianism embraces not only commonsense realism but also scientific realism, though Aristotle himself ran these two positions together in ways no longer possible today.(10) The commonsense realism of Menger (as of all Austrian economists) is seen in his treatment of agents, actions, beliefs, desires, etc. In regard to these sorts of entity there is no opposition between reality as it appears to common sense and reality as revealed to scientific theory. Menger's (or the Austrian economists') scientific realism, on the other hand, is revealed in the treatment of phenomena such as spontaneous orders and invisible hand processes, where common sense diverges from the fine structures disclosed by theory.(11)

Taken together with 3., this aspect of the Aristotelian doctrine implies that we can know what the world is like both in its individual and in its general aspect, and our knowledge will likely manifest a progressive improvement, both in depth of penetration and in adequacy to the structures penetrated. Indeed Menger points at the very beginning of the Principles to a correlation between `the higher culture of a people' and the extent to which `human beings penetrate more deeply into the true essence of things and of their own nature' (1871, p. 4, Eng. p. 53).

6. We can know what this world is like, at least in principle, from the detached perspective of an ideal scientific observer. Thus in the social sciences in particular there is no suggestion that only those who are in some sense part of a given culture or form of life can grasp this culture or form of life theoretically. The general structures of reality are not merely capable of being exemplified, in principle, in different times and cultures; like the basic laws of geometry or logic they also enjoy an intrinsic intelligibility which makes them capable of being grasped, again in principle and with differing degrees of difficulty, by knowing subjects of widely differing sorts and from widely differing backgrounds. Indeed, because the essences and essential structures are intelligible, the corresponding laws are capable of being grasped by the scientific theorist in principle on the basis of a single instance.(12)

7. The simple essences or natures pertaining to the various different segments or levels of reality constitute an alphabet of structural parts. These can be combined together in different ways, both statically and dynamically (according to co-existence and according to order of succession). END OF QUOTE

Those points add up to a position that is very close to Popper's metaphysics and epistemology and they are drawn from the version of Aristotelian thought that was circulating in Austrian circles, especially a pre-Mengerian school of economists that Menger would have read. That is the cameralists as described in another paper in the Caldwell volume.

Smith went on to write:

"Many of the above theses are of course thin beer, and might seem trivially acceptable. Taken together, however, they do have a certain metaphysical cutting power. It is thesis 5., above all, which establishes the line between the Aristotelian doctrine and that of Kant (for whom there looms behind the world we know an inaccessible world of `things in themselves'). Theses 1. and 5. mark off Austrian Aristotelianism from all idealist doctrines of the sort which embrace the view that the world of experience or of scientific inquiry is somehow created or constituted by the individual subject or by the linguistic community or scientific theory, or what one will. Theses 2. and 6. distinguish the doctrine from all sorts of historicism, as also from hermeneuticist relativism and other modern fancies. And theses 2. and 5. tell us that, for the Aristotelian, scientific or theoretical knowledge is possible even of the structures or essences of the social world, a view shared in common by both Menger and Brentano, and denied (in different ways) by historicists and relativists of differing hues."

"Most importantly, however, the doctrine is distinguished via theses 3. and 5. from the positivistic, empiricistic methodology which has been dominant in philosophical circles for the bulk of the present century and which enjoys a position as the unquestioned background of almost all theorizing amongst scientists themselves."

Smith went on to demarcate the kind of Aristotelian thought that influenced Menger from the ideas that were taken up in Germany by the likes of Hegel and Marx.

"8. The theory of value is to be built up exclusively on `subjective' foundations, which is to say exclusively on the basis of the corresponding mental acts and states of human subjects. Thus value for Menger in stark contrast to Marx is to be accounted for exclusively in terms of the satisfaction of human needs and wants. Economic value, in particular, is seen as being derivative of the valuing acts of ultimate consumers."

"9. There are no `social wholes' or `social organisms'. Austrian Aristotelians hereby and leaving aside the rather special case of Wieser embrace a doctrine of ontological individualism, which implies also a concomitant methodological individualism, according to which all talk of nations, classes, firms, etc., is to be treated by the social theorist as an in principle eliminable shorthand for talk of individuals. Economics is methodologically individualist when its laws are seen as being made true in their entirety by patterns of mental acts and actions of individual subjects, so that all economic phenomena are capable of being understood by the theorist as the results or outcomes of combinations and interactions of the thoughts and actions of individuals. Such combinations and interactions are not mere `sums'. Thus neither ontological nor methodological individualism need imply any sort of atomistic reductionism: the individual of which the social theorist treats is, as a result of different sorts of interaction with other individuals, a highly complex entity. He might more properly be conceived as something like a node in the various spontaneous orders in which he is involved. This is a familiar idea, which extends back at least as far as Aristotle.(20) "

"10. There are no (graspable) laws of historical development."

Smith then moved on to apriorism and made a distinction between two forms that he called IMPOSITIONIST and REFLECTIONIST. He could have made a contrast with the the more familiar terminology of the lamp and the mirror, in the first case where our categories are projected into and onto the world, in the other they are formed by reflection from the world. For Smith the reflectionist view of knowledge does not involve a passive reflection but a projection of categories that more or less approximate what is outside, by good fortune, as it were.

"On the one hand are what we might call impositionist views, which hold that a priori knowledge is possible as a result of the fact that the content of such knowledge reflects merely certain forms or structures that have been imposed or inscribed upon the world by the knowing subject. Knowledge, on such views, is never directly of reality itself; rather, it reflects the `logical structures of the mind', and penetrates to reality only as formed, shaped or modelled by a mind or theory."

"On the other hand are reflectionist views, which hold that we can have a priori knowledge of what exists, independently of all impositions or inscriptions of the mind, as a result of the fact that certain structures in the world enjoy some degree of intelligibility in their own right. The knowing subject and the objects of knowledge are for the reflectionist in some sense and to some degree pre-tuned to each other. Direct a priori knowledge of reality itself is therefore possible, at least at some level of generality knowledge of the sort that is involved for example when we recognize the validity of a proof in logic or geometry (where it is difficult to defend the view that the character of validity would be somehow imposed upon the objects in question by the epistemic subject)."

Critical rationalists will probably sympathise with a view that is close to Smith's reflectionist apriorism, where the "a priori" categories are a mix of genetic dispositions and ideas that we have picked up by learning mixed with experience prior to the time when we start thinking critically about the possible solutions to some problem.

"The impositionist view finds its classical expression in the work of Kant (whose ideas may be safe against the argument just presented), and special versions of impositionism are to be found also in Hume (in his treatment of causality), in Mach (in his theory of thought economy), and in the work of the logical positivists. The reflectionist view, on the other hand, finds its classical expression in Aristotle; it was developed further by successive waves of scholastics extending far into the modern era, and brought to perfection by Brentano and his successors, above all by Adolf Reinach and other realist phenomenologists in the early years of this century, the latter building on ideas set out by Husserl in his Logical Investigations."

For Smith, Menger was a sophisticated reflectionist and the kind of essences that he was looking for may very well approxmate to what Popper called propensities late in life when someone pointed out that he took a very Aristotelian turn. Popperians tend to reach for our revolvers when we encounter talk of essences, especially in connection with Aristotle but Smith has given reason to hold our fire.

"Menger is working, rather, against the background of an assumption to the effect that the universals of economic reality are not created or imposed in any sense, but are discovered through our theoretical efforts. Economists do not study concepts or other creatures of the mind. Rather, they study the qualitative essences or natures of and the relations between such categories as value, rent, profit, the division of labour, money, etc."

'Theoretical economics has the task of investigating the general essence and the general connection of economic phenomena, not of analysing economic concepts and of drawing the conclusions resulting from this analysis. The phenomena, or certain aspects of them, and not their linguistic image, the concepts, are the object of theoretical research in the field of economy. (Menger 1883, p. 6, n. 4, Eng. p. 37)'

"Menger, we might say in this light, seeks to develop a categorial ontology of economic reality in just the Aristotelian sense, and in just the sense, too, in which Brentano sought a categorial ontology of psychological reality. He seeks to establish how the various different sorts of building blocks of economic reality can be combined together in different sorts of simple structured wholes, and to establish through the application of what he himself called a genetico-compositive method how such wholes may originate and how they may develop and become transformed over time into other kinds of wholes."

Smith noted that apriorism in its unhelpful form came down to Mises and infected his methodology to some extent (though he wavered at times towards a better position).

"Common to all aprioristic doctrines is a view to the effect that there are laws or propositions which are on the one hand universal and necessary and on the other hand intelligible (capable of being grasped by non-inductive means). Kantian impositionism is the view that such a priori laws or propositions reflect categorial impositions of the mind. As a result of the influence of Frege and Wittgenstein, now, especially as filtered-down through the logical positivism (logical atomism) of the Vienna circle, recent Kantian varieties of apriorism have tended to take an extreme form which sees such categorial impositions as effected always via logic or language. More specifically, a priori propositions are seen as being characterized by the fact that they can in every case be exposed via a process of stripping out defined terms and replacing them with definiens consisting of more primitive expressions as mere tautologies or analytic truths, entirely empty of content and consistent with any and every factual state of the world. `All bachelors are married' is revealed as analytic in this way by being converted into `All unmarried men are unmarried', which is an instance of the logical truth: `All A's which are B are B'. Mises qua methodologist was very clearly tempted by the idea that the laws of praxeology should be analytic in this sense."

In a nutshell, Smith suggested that Mises did better in his practice as an economist than he did in his philosophical justification for it. [Part of the problem is the pervasive influence of the doctrine of justificationism itself, but that is not a part of Smith's story]. I suggest that there is a parallel and a contrast between Newton and Mises. When Newton pretended or claimed to be a proper inductivist and feigned no hypothesis, he was being unhelpful, but at least he did not spend a lot of time preaching and defending inductive logic. To the extent that Mises and some of his followers did and do preach doctrinaire apriorism they have been unhelpful.

This is the last section of the paper.

9. If Austrian economics did not exist, would it be necessary to invent it?

Austrian economics, we have said, is both theoretical and subjectivist. Neoclassical economics, in contrast, is neither the one nor the other. For it rests on the positivist thesis that economic reality lacks intrinsic intelligibility tout court, so that no non-trivial part of economic theory could be a priori in any of the senses distinguished above. The propositions of economics are mere inductive hypotheses, and the method of economics consists in the building of testable models, selection among which is effected, at least in principle, on the basis of relative predictive strength. Because realism (in the reflectionist sense) falls out of account as a criterion of selection, such models are repeatedly threatened with becoming shorn of their relation to those basic everyday categories in which the science of economics has its roots. Austrian economics, in contrast, is marked by a willingness to sacrifice both the goal of predictive power and the mathematical tools associated therewith precisely in order to come to an understanding of these basic categories themselves.

The contrast here has seemed to many to justify the striking of pugilistic attitudes. From the Aristotelian apriorist perspective, however, it might begin to appear as if the principles underlying both sorts of economic methodology might possess some grain of truth. For Austrian economics might then be conceived not as an alternative to the economics of model-building and prediction but as a preliminary activity of establishing this missing connection to ground-level economic realities. Austrian economics might, in other words, be conceived as a safe harbour for a practice which at present takes place among neo-classicists only surreptitiously and unsystematically a practice sometimes referred to under the rubric of `taking subjectivism seriously'. This practice might also be conceived as the attempt to exert control in the direction of greater commonsensical realism over the model-building tendencies of mathematical economists. The exercise of such control might lead from this admittedly somewhat idealized perspective to the construction of different kinds of models. But then also it may even be that empirical and mathematical economics will in certain circumstances lead to results which constrain a revision of Austrian economics itself. A view of this sort can be found in germ already in the work of Wieser.(32) He, too, saw economic theory as beginning with the description based in part on introspection, as he saw it of the simplest structures of economic reality, a description which may then be supplemented and to some extent corrected by empirical research into the various ways in which these simple structures may come to be affected contingently, e.g. in different social and historical contexts.

For the moment, though, I am suggesting merely that we consider a thought-experiment, or pipe-dream, to the effect that Austrian economics might be seen as providing a certain sort of foundation for empirical-mathematical economics in something like the way in which geometry provides a foundation for the discipline of physics. We have said that from the Aristotelian perspective a proposition's being a priori signifies that it (or the structure which makes it true) enjoys some degree of intelligibility. What it does not signify, is that our knowledge of such a proposition must be in any sense incorrigible or infallible. Indeed, the idea that empirical discoveries might lead in principle to a correction of the a priori foundation of the economic discipline opens up the exciting prospect of something like a non-Euclidean Austrian economics, perhaps even to a family of such non-Euclidean disciplines, each of which could claim some degree of a priori support. I must confess at once, however, that I have no notion as to how such disciplines might look. END

I think you can see what it looks like in the work of Boettke and associates at the George Mason Uni and elsewhere.

In a later version of that paper, printed as the last chapter of a book on the Austrian philosophers, Smith wrote about "fallibilistic apriorism" which means that the method is not seen as a justification, just a method of exploration, a very important shift of focus, but that is another story.